Housing Forecasts & Research Reports

Please email me any links of other forecasts or research reports you have read for Calgary and area.

CHMC Housing Market Outlook
August 31, 2010

The average MLS® price is expected to edge lower in the third quarter of 2010 with modest growth resuming thereafter as balanced market conditions curtail the upward pressure on house prices. For 2010, the average MLS® price will be $338,900 while 2011 will see a slight increase to $342,200.

(read full report)
 

Canadian Centre for Policy Alternatives
August 31, 2010

Home sales may be slowing, but prices in six of Canada’s largest housing markets are in bubble territory for the first time in 30 years — and a U.S.-style correction is still not out of the question. Read “Canada’s Housing Bubble: An Accident Waiting To Happen”
 

C.D. Howe Institute 
August 31, 2010

The report on the risk of a Canadian housing bust, by Jim MacGee, an associate professor of economics at the University of Western Ontario, acknowledges that recent swings in Canadian house prices have raised concerns that a U.S.-style housing bust is looming. But upon comparing policies and housing market conditions in Canada with those in the U.S., the report concludes that there is little likelihood of a U.S.-style surge in foreclosures or a collapse of house prices in Canada.

(read full report)

RBC Housing Outlook
August 2010

Excerpt from report:

Alberta
Sales – Last year’s rebound in Alberta’s housing market proved to be
temporary, as monthly home resales fell precipitously so far this year,down 34% year-over-year in June.

Except for the lows reached at the bottom of the 2007-2008 market downturn, the pace of resales in June was the weakest since early 2001 – and fully 40% below that which was maintained during 2006 (i.e., before the downturn).

Such weakness amid improving conditions in the provincial economy strikes us as being overdone. We expect that the continued strengthening in the economy (and brightening of employment prospects) will lead to a turn around in housing market activity later this year, with the amelioration likely to be mild at first but then becoming more pronounced during 2011.

We forecast a drop of 9.9% (to 51,800 units) in home resales for 2010, followed by a 9.1% (to 56,500 units) rebound in 2011.

Prices – The sharp drop in demand considerably weakened market conditions in recent months. While supply has begun to adjust modestly downward, it remains plentiful, even a little excessive relative to the current pace of home resales. Consequently, the provincial market has shifted very close to being a buyers’ market, which will exert some downward pressure on home prices in the near term. As demand picks up later this year and further downward adjustment is made to supply, however, we expect that a stronger balance will emerge that will lead to moderate price increases during the course of next year.   

We project Alberta home prices to rise by 2.6% in 2010 and 0.9% in 2011.

Click here for full report
 

TD Economics: Canadian Housing Outlook
May 2010

Excerpt from the report:

Our existing home sales and average price forecast for 2010 is largely unchanged since December 2009. We still expect 475K transactions to take place, with an average annual price nearing $350K, an increase of 9% over 2009.

However, this hides an underlying shift occurring over the course of this year. While we anticipated sales and prices to be strong in the first half and to cool in the second half, we now expect this contrast between the two halves will be sharper.

Click here for full report (PDF)
 

Genworth: Metropolitan Condo Outlook 2010

Excerpt from the above report:

Calgary’s apartment condominium market is recovering slowly from a boom-induced hangover. Rising sales of existing units have eroded swollen inventories and set the stage for modest price advances. Starts still face significant inventory competition and will remain below peak levels, despite this year’s impressive percentage rebound.

click here for full report
 

Demographia:  6th Annual International Housing Affordability Survey
January 2010

Excerpt from the above report:

There were 62 severely unaffordable markets this year, down from 64 in 2008. The least affordable markets were concentrated in Australia (22) the United Kingdom (19) and the United States (11). Nine of the 11 US severely unaffordable markets were in California. There were 5 severely unaffordable markets in New Zealand and 5 in Canada (Table ES-3)

Of the 272 markets surveyed, there were 103 affordable markets, 98 in the United States and 5 in Canada. This is an improvement from 87 in 2008

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TD Economics:  Real Estate Trends Could Impact Canadian Monetary Policy
October 2009

Excerpt from the above report:

Canadian housing sales have surged, with a rush of homebuyers lured by attractive mortgage rates, leading to a rebound in resale home prices. Recent Bank of Canada statements indicate that it is closely watching the housing market, expecting its recent strength to be “temporary”.  If real estate activity does not cool, it might prompt the Bank of Canada to tighten earlier or more aggressively than anticipated.

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CBRE: Commercial Real Estate
September 2009

Excerpt from the above report:

Calgary’s third quarter was characterized by a noticeable jump in vacancy rates, up from 4.7 to 13.1 per cent, year-over-year. The city’s oil and gas industry and commercial market remained inexorably linked, as players both large and small continue to recognize that even Calgary has not been immune to the country’s new economic reality. Accordingly, sublets (as a percentage of total vacant space) also increased in the third quarter, rising from 25.6 to 40.7 per cent from the same period last year. Average net rent for class A commercial space also experienced a precipitous third quarter drop, going from $35.98 to $25.18 per square foot, year-over-year.

click here for full report

RBC: Housing Trends and Affordability
September 2009

Excerpt from the above report:

Calgary — Climbing out of its hole

Housing market fundamentals have greatly improved in recent months in Calgary and this is helping activity to climb out of its deep hole. The sizable drop in mortgage rates and slide in property prices since the latter part of 2007 have worked to fully restore affordability in the city.

RBC’s affordability measures for Calgary posted some of the largest declines among major Canadian cities from the cyclical peak — easing once again in the second quarter between 0.1 and 0.3 percentage points — to levels below long-term averages. Sales of existing homes have picked up considerably through the spring and summer, which has largely depleted the earlier overhang of properties for sale. Supply and demand are, consequently, in much better balance, even slightly favouring sellers for the first time in two years.

Yet the latest figures still show property values generally languishing. However, as confidence gradually returns in the city, the stage will be set for a turnaround.

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TD Economics
July 2009

Excerpt from the above report: House prices and sales are showing surprising resilience during the recession; however, we regard the current average prices and pace of sales for existing housing as unsustainable, likely representing a bringing forward of future demand. These factors point to a moderation of demand for mortgage credit in the months ahead.

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CMHC - Spring Housing Outlook: Calgary
May 2009

Excerpt from the above report: Resale market conditions that favoured the buyer in 2008 continued to favour the buyer during the first quarter of 2009, but there are signs that the market is transitioning toward balanced conditions. Supply to the market place is significantly lower.

First-quarter new listings dropped by one-third compared with the first quarter of 2008. As a result, two market balance indicators, months-of-supply and sales-to-new listing ratios, have both improved during the first quarter. The monthsof- supply, defined as active listings divided by sales, was at nine months in January but fell to five months by March and headed towards the threshold of balanced conditions at
3.5 months.

The sales-to-new listing ratio has also improved from 25 per cent in January to 47 per cent in March, an important condition to support a balanced market. Because of improved market balance, resale prices are beginning to show some signs of stabilizing.

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Scotia Economics - Housing Report
May 2009

Excerpt from the above report: Buyers, especially first-time, are being lured by historically low mortgage rates, greater affordability and increased supply. The rise in demand, combined with fewer new listings, has restored a better balance to the market…These ‘green shoots’ are encouraging. On an annualized basis, average home prices in early 2009 are running about 6% below last year’s levels, while sales volumes are down 16%. This is tracking a slightly better performance than our forecast for a 10% decline in average prices this year, and at the low end of our forecast for a 15-20% drop in sales.

Nonetheless, we still feel there is more downside than upside risk to home sales and prices. The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in demand near-term. Meanwhile, a still-high level of active listings relative to underlying demand will continue to pressure prices.

click here to read full report
 

RBC - Housing Affordability Report
April 2009

Excerpt from the above report: The economic slump that ensued from the sudden and precipitous drop in oil and gas prices has thrown more cold water on Alberta’s top two housing markets. Already in correction mode since late 2007, housing market activity in Calgary and Edmonton contracted sharply during the second half of 2008 as the cancellation of major capital projects in the province’s energy sector and rising unemployment upset confidence, further cooling demand for housing. Sales of existing homes tumbled in both cities starting early fall after showing some signs of stabilizing mid-year. This caused price declines to accelerate.

At the end of 2008, prices in Calgary had dropped 12% to 14% from their peak and 8% to 20% in Edmonton. With low sales-to-new listings ratios giving the upper hand to buyers, further price erosion is likely to take place. On a brighter note, the market correction is helping to restore some degree of affordability in both cities, although RBC’s measures still have a fair distance to go before returning to long-term averages.

click here to read full report
 

TD Economics: Overpriced & Overbuilt, Canadian Housing Market Returns to Fundamentals
April 2009

Excerpt from the above report: Wild Rose country was overbuilt substantially during its boom years, and mounting inventories in Calgary and Edmonton are cause for concern. Indeed, even over 1991 to 2001, housing starts in Alberta had already overshot household formation by 12%.

With oil prices having subsided from their fever pitch and expansion projects now on hold, the net inflow of migrants has slowed dramatically and may even cease completely during 2009. The previous pace of homebuilding could not be sustained and slowed precipitously during the fall. Alberta’s starts further declined to 13,100 units in February, 61% lower than a year prior. With Alberta’s economy set to contract by 2.5% this year in real terms and roughly 10% in nominal terms, homebuilding has likely not yet bottomed.

While around 30,000 new households will form in the province during 2009, starts are likely to be nearer 14,000 units on the year. Even accounting for the population inflows, the province’s homebuilding overshot fundamentals by nearly 10% during the commodity boom. From 1991 to 2006, Alberta has approximately 72,000 more housing starts than new households, and the estimated 13% overshoot of fundamentals during 2002-2008 exhibits this excess.

Now, plunging sales-to-new listings ratios and mounting unsold inventories clearly indicate that the present stock of homes is excessive. As of February, Calgary had an overhang of 1,133 unsold units (874 singles and 259 multiples) and a sales-to-new listings ratio of 0.29, indicative of a definitive buyer’s market, having now fallen to its lowest value in two decades.

In both of Alberta’s major cities, homebuilders have worrisome unsold inventories of new singles, and, with demand having cooled rapidly, resale markets already appear saturated.

The steep appreciation of house prices during Alberta’s boom times now appears to have been far too optimistic. Although income growth was very strong, Albertan housing during 2007 and 2008 was especially overpriced relative to fundamentals. The quick climb of Albertan resale prices substantially eroded affordability and, even though Albertans were Canada’s highest income earners on average, the growth in household income was not sustainable.

The 9% year-over-year decline in Alberta’s average resale price in February is evidence that past prices exceeded fundamentals. Those inflated prices drove homebuilding in excess of fundamentals. Given Albertans’ deteriorating incomes and the overhangs of unsold inventories, Alberta’s resale prices probably have another 20% leg down over 2009.

click here to read full report
 

TD Economics Provincial Forecast
March 2009

Existing (resale) home sales and prices are projected to slip significantly this year vis-a-vis last year. We expect only 320,000 existing homes to be sold in 2009, or 26% fewer than a year prior. The pullback had already started in earnest in the second half of last year in B.C. and Alberta.

This trend quickly generalized across the country within a matter of a few months, however. All provinces will see a significant double-digit percentage drop in home sales, not too far off from the national figures. As a result of much softer demand for homes, home values also started declining in the second half of 2008. We expect home prices to unwind by a further 13.5% this year on an annual
average basis after a modest decline of 0.7% last year.

More telling is the peak-to-trough measure, by which we expect national home prices to correct by 20-25%. Given the past froth experienced in some Western markets and the severity of the economic downturn in Ontario, these locales will lead the correction. Homebuilding has also been in full blown retreat since late last year. We currently expect an average of only 125,000 housing starts
this year (41% fewer than in 2008) with a very modest uptick to 130,000 units next year.
 

RBC Economics Housing Report
February 2009

While the good news appears to outweigh the bad in our list of factors, we still see room for Canada’s housing market to slow in 2009. The weakened sales pace and falling prices are only adding to the anxiety Canadians are feeling about the economy and construction has already started to soften as indicated by the sharply lower level of housing starts in November through January.
 

CMHC Housing Outlook 2009 for Calgary  (1.02 MB)
January 2009

The average residential resale price decreased by 2.1 per cent in 2008 to $405,268 from 414,066 in 2007.

This represented the first annual decline in the Calgary CMA since 1995 when the average price decreased by 0.7 per cent. The annual average price is somewhat muted as compared to the monthly year-overyear changes at year-end.

For example, the December 2008 average single-detached price was 9.5 per cent below the average price a year earlier, and the average condominium price of $274,919 was 9.8 per cent lower.

A high level of supply relative to demand and a moderating economy will continue to put downward
pressure on prices and the annual average price in 2009 is projected to be lower than it was in 2008
 

5th Annual Demographia International Housing Survey
January 2009

"The survey of housing afford-ability said Calgary and Toronto were tied for 29th in Canada and 190th in the world.

To assess affordability, Demographia divided median house prices in individual markets by the median annual gross house-hold income.

In Canada, on average, citizens require 3.5 years of annual income to purchase a home. In Calgary, it would take 4.8 years." (Calgary Herald, January 2009)
 

Royal Lepage 2009 Market Survey Forecast
January  2009

Forecasted house prices for 2009 in:

• Calgary -1%
• Edmonton 0%
• Vancouver -9%
• Toronto -4%
• Winnipeg 4%
• Regina 6%

RBC Housing Trends and Affordability

December 2008

In Alberta, “as stiff headwinds blow on the provincial economy and erode consumer confidence, homebuyers will be reluctant to step into play until affordability improves more significantly,” said Robert Hogue, senior economist at RBC. “The province’s housing affordability conditions still have a fair way to go before returning to long-term averages.”

“As concerns mount about the economy, spurred by the sharp drop in energy prices that sent shivers down homeowners’ spines, the housing markets in both Calgary and Edmonton are expected to retreat even further in 2009."

Read the entire report here
 

RE/MAX Housing Market Outlook 2009
December, 2008
 

"While a marked decline in homes listed for sale served to stabilize residential real estate activity in Calgary by mid-year, stock market volatility and the threat of a global economic recession deflated consumer confidence in the Fall.

Calgary’s high-rise condominium market, propped-up by speculation in recent years, is more vulnerable to new market realities. Thousands of new units are expected to come on-stream in 2009, which could create a glut of listings. Some developers have already moved to mitigate their losses by stopping new projects."

Read the Remax report here

A Different Look At Canadian Home Prices (TD)
November 20, 2008
 

As of the latest available data (Oct. 2008), the CREA sales-weighted major market home price
measure was down 10.9% Y/Y. The TD HPI stockweighted measure shows a much smaller decline of 4.6%.

Read theTD report here 

Where’s the trigger for a Canadian House Price Crash? (CIBC)
September 30, 2008
 

"Every dollar drop in the value of Canadian real estate
elevates the level of anxiety about a US-style housing
meltdown in Canada. To be sure, house prices in Canada
will continue to ease in the coming months. But the
triggers that led to a freefall in Canadian real estate
markets in the early 1990s and today in US markets are
nowhere to be found."

Read the entire CIBC World Markets report here
 

Canadian Real Estate Tipping Point? (Merrill Lynch)
September 2008
 

"These data imply that the Canadian household sector is now overextending itself as much as the US or UK ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle...We believe that markets remain overly sanguine with respect to the prospects fort he Canadian housing market, the financial sector and the overall economy."

Read the entire Merrill Lynch report here
 

Are Canadian Housing Markets Overpriced? (University of BC)
September 2008

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To read the entire 26 page report: CLICK HERE 
 

Real Estate Trends (Scotia Economics)
May 2008

"...the cooling in overall activity is most notable in many of Canada’s hottest urban housing markets in recent years, including Calgary and Edmonton. Both centres have officially moved into buyers’ territory as soaring prices weaken demand and fuel new listings...

"Home prices in Canada are not substantially overvalued. Our long-term housing price model puts average home prices in 2007 at about 8% above their long-term trend, compared with a premium of 12% and 18%, respectively, at the 1976 and 1989 housing cycle peaks."

"We predict...somewhat lower sales and construction, and a period of relatively flat inflation-adjusted home prices...a major risk to the outlook would be a deeper and more protracted downturn in the U.S. economy...Tighter credit conditions and heightened global financial market volatility."

Calgary Chamber of Commerce Housing Affordability Report (3mb)
May  2008

"Based on the historical analysis of all measures, Calgary was at one of its most affordable positions between 2000 and 2005. Calgary’s housing affordability has since deteriorated. Calgary’s Median Multiple increased from 3.3 in 2004 to 5.1 in 2007. The proportion of median household income spent on shelter costs in Calgary increased from 32 to 44 per cent over this period. And, according to Market Based Measure, in 2007 Calgarians had the least amount of discretionary income available after purchasing and adequate living standard.

Prior to 2005 Calgary was more affordable than Toronto and compared favourably with the other jurisdictions analyzed. Since then Calgary has become the most expensive place to live, and this housing price appreciation threatens our quality of life and compromises our ability to compete with other jurisdictions for talent."

RE/Max Affordability Report 2008
April  2008

"First-time buyers are finally able to catch their breath, as growing inventory levels have held rising house prices in check in Calgary Metro this year. Buyers no longer feel the sense of urgency present just one year ago, and with falling interest rates, may finally find themselves with a favourable advantage..."

RBC Provincial Outlook
April  2008

"Housing affordability is poised to improve across the country this year on
the back of falling mortgage rates and cooler house price gains. House price
growth is expected to move into the single-digit range in almost every province
by year-end."

RBC Housing Affordability Research
March 2008

Calgary & Edmonton: "The pendulum has swung quite rapidly from a red-hot seller’s market to one that is decelerating at a remarkable pace...sales-to-new listings ratios in both cities continue to decline and still remain in the soft end of a balanced market. Yearover- year house price gains continue to slow sharply dropping in January to 8% in Calgary and 11% in Edmonton... As more supply gradually makes its way to market, the pace of price gains are expected to continue to fall closer in line with income growth and underlying market conditions."

BMO Nesbitt Burns Provincial Monitor
Winter 2008
 

Alberta’s economy remains among the strongest in the country, likely posting 3.8% growth in 2007. Consumer activity in the province is robust, job growth is firm, and near-$100 oil is a boon for provincial coffers. However, growth should decelerate further this year, but remain well above the national average at 2.8%.

There are a number of factors contributing to slower growth in the province this year, even with oil prices starting out near $100. The once white-hot housing market is cooling fast, with price growth for existing homes in Calgary falling into single digit territory for the first time in more than two years, and provincewide existing home sales down 24% y/y in December—the worst showing since the mid-90s.

CMHC Housing Market Outlook, Canada Edition  Q1 2008
February 2008
 

The Housing Market Outlook - Canada provides timely information on housing trends and forecasts. With both a national and local perspective, this quarterly report provides a two-year forecast of housing starts, sales, prices and key economic indicators and is a valuable resource for all those who are involved in the Canadian housing industry

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Demographia International Affordability Housing Survey
January 2008
 

The fourth annual international survey of housing affordability conducted by Demographia International said Calgary and Toronto were tied for 24th in Canada while Thunder Bay was ranked as the most affordable city in the nation followed by Saguenay, Saint John and St. John’s. Edmonton was 23rd.

Kelowna was at the bottom of the list as the least affordable with Vancouver and Victoria just behind it. Thunder Bay was also ranked the most affordable in the world urban markets which were surveyed.

RBC Housing Affordability Research
January 2008
 

"Sales-to-new listings ratios in both cities have swung dramatically from a deep seller’s market early in 2007 to the soft end of a balanced market in both Calgary and Edmonton. All signs point to improvements in affordability conditions in both cities this year.

Alberta: Demand fornew and existing homes has already slowed sharply with markets expected to continue to decelerate this year. Price gains are expected to slow dramatically from 30% in 2007 down to the 9% range this year. A slower market this year points to affordability improvements in 2008."

2008 Economic Forecast
January 2008

Alberta’s forecasted growth:

- 4.7 per cent -- CIBC World Markets

- 3.6 per cent -- Bank of Nova Scotia

- 3.5 per cent -- Government of Alberta

- 3.4 per cent -- BMO Nesbitt Burns

- 2.8 per cent -- TD Bank Financial Group

Royal Lepage 2008 Market Survey Forecast
December 2007

Forecasted house prices in Calgary 4.0% increase, Edmonton 1.0% increase

 

CNN Money: US Real Estate - Buy, Sell, or Hold
November 2007
 

In most markets people won’t lay out much more in monthly costs to own a house or condo than they would to rent a similar property unless they expect a huge profit when they sell. Indeed, speculators chasing quick profits did a lot to inflate the recent bubble.

But once the fervor fades, prices must fall to restore their normal, long-term relationship with rents. Rents exercise a kind of inevitable gravitational pull on prices. The ratio of prices to rents "behaves much like price/earnings ratios for stocks," says Yale economist Robert Shiller.

Statistics Canada - New Housing Price Index
November 2007
 

New housing prices rose 5.9% in Calgary in September, the only Prairie city with a year-over-year increase below 10%. This occurred despite higher development costs, as new lots were released into the market.

Government of Alberta - Employment, Immigration & Industry
November 2007
 

Alberta Housing starts are forecast to total 47,750 in 2007 and 42,250 in 2008, down from the historical peak of 48,962 in 2006. Resale homes in 2007 will remain strong at 74,000, but will fall to 70,000 in 2008.

TD Economic Outlook 2008
October 2007
 

Calgary average resale home price percent change forecast as of Oct 2007 :

2008:  10.3%
2009:     2.4%

Calgary Transportation Effect
October 2007
 

Calgary transportation improvements will deliver a 10%–20% enhancement of real estate values in the regions most affected. In the future, these areas will outperform the rest. If the market goes up everywhere, these areas will increase by about 10%–20% more. If the Alberta values drop,these will drop by 10%–20% less.

With the completion of the Ring Road and the extention of the LRT, real estate prices in key neighbourhoods will increase more quickly than in other regions of the city due to improved transportation linkages. Improved accessibility drives real estate demand.

RBC Provincial Outlook 
October 2007
Such weakness amid improving conditions in the provincial economy
strikes us as being overdone. We expect that the continued strengthening
in the economy (and brightening of employment prospects) will
lead to a turnaround in housing market activity later this year, with the
amelioration likely to be mild at first but then becoming more pronounced
during 2011.
We forecast a drop of 9.9% (to 51,800 units) in home resales for 2010,
followed by a 9.1% (to 56,500 units) rebound in 2011.
Prices – The sharp drop in demand considerably weakened market
conditions in recent months. While supply has begun to adjust modesly
downward, it remains plentiful, even a little excessive relative to
the current pace of home resales. Consequently, the provincial market
has shifted very close to being a buyers’ market, which will exert some
downward pressure on home prices in the near term. As demand picks
up later this year and further downward adjustment is made to supply,
however, we expect that a stronger balance will emerge that will lead
to moderate price increases during the course of next year.
We project Alberta home prices to rise by 2.6% in 2010 and 0.9% in
2011.

This provincial economy remains perhaps the most outstanding example of the key reasons why the Canadian economy is marching to the beat of its owndrummer and, as a result, we have revised our growth forecast for Alberta’s economy upward to 4.5% in 2008, notwithstanding uncertainty about royalties.